The mining sector is one of the most important economic contributors to the African economy. However, mining is also facing several challenges – particularly with regards to sustainability and cost-saving. Mining operations are increasingly turning to solar PV microgrids as a reliable and sustainable alternative energy option.
A 2019 Mckinsey review on measures to invigorate the South African mining industry identified cost-cutting competitiveness as a key factor. As an energy-intensive industry with a projected increase in energy consumption of 36% by 2035, the mining sector is looking to renewable energy, and particularly solar, as a significant cost-saving solution. This is evident in the agenda set for the 2020 Investing in Africa Mining Indaba taking place in Cape Town at the beginning of February, where industry experts will lead the conversation on the economic and societal benefits of renewable energy in mining.
A shift in industry thinking
‘proactive mitigation of ESG risks creates long term shareholder value.’
Speaking to Engineering News & Mining Weekly Tom Quinn, an organiser of Mining Indaba, emphasised that:
‘It is now absolutely necessary for mining companies to have ongoing engagement with their investors and with the communities in which they operate in order to mitigate the risk of investor or community backlash from a lack of sustainable practices.’
This shift in industry thinking is aided by the economic benefits associated with using renewables such as solar PV microgrids to supplement more traditional energy sources. It is now widely accepted that maintaining a Triple Bottom Line is key to responsible investment. IFC’s Global Head of Mining Namrata Thaper advises that:
‘[E]xperience has shown that proactive mitigation of ESG risks creates long term shareholder value. This value is created by ensuring alignment between stakeholders and thereby reducing the likelihood of disagreements between stakeholders, which can lead to cancellation of concessions by government, labour unrest and strikes, community blocking or stopping of operations and more which are all events that can negatively impact financial performance…’
‘The most advanced options… are hybrid systems that integrate solar, wind and batteries with diesel, gas or heavy fuel oil generators, without compromising reliability or power quality.’
For the mining industry, who rely heavily on consistent, uninterrupted power, the key energy trends to watch in 2020 are hybrid power, advances in renewables technology, variable power usage, intelligent seamless integration and meaningful cost savings.
Climate change, loadshedding and the fluctuating diesel price
However it is not just Triple Bottom Line reporting that is pushing mining companies to seek renewable energy solutions. Threats to productivity in the southern African region include unplanned breakdowns at state-run electricity utility Eskom, the fluctuating diesel price and supply disruption risks in the SADC region. The reliability of solar PV microgrids can mitigate these risks significantly.
On a global scale interruptions to energy production as a result of violent weather conditions caused by climate change has resulted in a growing shift to renewable energy. In response to this new challenge, businesses are focused on ramping up energy efficiency and reducing carbon emissions. Spencer Glendon, a senior fellow at Woods Hole Research Center cautions that climate change may be altering the economics of long-term infrastructure investment. It is crucial to ensure that one’s power supply is independent of at risk utility plants.
Solar PV microgrids offer a hybrid solution to these obstacles. In cases of remote locations, weak grid supply and reliance on diesel, there is an optimal business case for mines to use a solar PV microgrid. This typically combines a backup generator with batteries and solar to ensure a seamless transition and no interruption of power.
Positive outlook for solar PV globally and locally
‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’
The International Energy Agency’s (IEA’s) 2019 renewable energy market forecast for solar PV states that ‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’. Thus as there is a global transition to a varied renewable power sources the southern African region will find itself at a competitive advantage due to its strong irradiance levels (South Africa average more than 2 500 hours of sunshine per year). As a result of falling costs of solar PV and batteries worldwide, microgrids are now accepted as a reliable and cost-effective solution for industrial power generation.
The added benefits of third party financing
Financed solutions allows mining facilities to achieve immediate savings with no initial capex outlay. A solar Power Purchase Agreement (PPA) enables businesses to pay off and maintain their own solar energy systems at no upfront costs, while enjoying the immediate benefit of cost savings. Solar PV microgrids are increasingly the option of choice when looking to adopt a reliable, affordable, and sustainable energy solution.